Foreclosures

Some lawmakers fear that when forbearance plans and enhanced unemployment coverage expire, the consequences for mortgage borrowers still affected by the pandemic will be severe.

The policy comes more than a month after a different agency issued similar guidance for loans backed by Fannie Mae and Freddie Mac.

Forecasts about the pandemic's impact on the mortgage market have grown less dire after forbearance requests by homeowners nearly leveled off in the first half of May.

A Democratic measure to freeze foreclosures and auto repossessions through the coronavirus crisis while expanding eligibility for loan forbearance is getting strong pushback from banks and credit unions, which complain it would constrain credit.

The agency's announcement came one day after the agency said it would provide borrowers struggling to stay current with an additional payment deferral option.

Mortgage lenders are preparing for the biggest wave of delinquencies in history. If the plan to buy time works, they may avert an even worse crisis: Mass foreclosures and mortgage market mayhem.

Federal Housing Finance Agency Director Mark Calabria said a virus-induced financial crisis might give rise to more delinquencies and foreclosures than the 2007 subprime mortgage meltdown.

While the mortgage market began the year healthy, lenders and borrowers need to prepare for the impacts of the coming coronavirus recession.

The temporary foreclosure moratorium on loans backed by HUD, Fannie Mae and Freddie Mac comes after lawmakers and housing advocates had pushed for steps to avoid consumers getting booted from their homes.

With small businesses feeling the financial scourge of the coronavirus, bridge loans could be the direction they turn to keep things afloat.